FROM PULASKI CIRCUIT COURT HONORABLE JEFFREY T. BURDETTE,
JUDGE ACTION NO. 13-CI-00087
APPELLANT: R. Aaron Hostettler London, Kentucky.
APPELLEE: John S. Gillum Somerset, Kentucky.
BEFORE: JONES, STUMBO, AND TAYLOR, JUDGES.
Cindy Deal, appeals the Pulaski Circuit Court's order
granting summary judgment in favor of Appellee, First and
Farmers National Bank, Inc. Having reviewed the record in
conjunction with the applicable legal authorities, we affirm.
Deal, the Appellant, obtained a money judgment in the amount
of $64, 600, against her ex-husband, James Deal, on or about
February 24, 2012. See Cindy Deal v. Wilson & Deal
2-Way, et al., Pulaski Circuit Court, Div. II, Civil
Action No. 10-CI-00838. In an attempt to collect that
judgment, Cindy's attorney took a post-judgment
deposition of James during which James testified that he
maintained a deposit account and thought he also probably had
some certificates of deposit ("CDs") with First and
Farmers National Bank, Inc. (the
on James's testimony, Cindy issued a non-wage garnishment
order to the Bank on May 11, 2012. The Bank received the
Garnishment Order on May 16, 2012, and filed its answer using
the AOC-150.1 form enclosed with the
garnishment order. In pertinent part, the Bank answered as
1. The name of the Judgment Debtor is JAMES DEAL.
2. At the time of the service of this order, the Garnishee
herein is indebted to the Judgement Debtor or holds money
belonging to the Judgment Debtor in the amount of $
3. Other property belonging to the Judgment Debtor and held
by me is as follows: NONE.
4. I, or I on behalf of the Garnishee herein, state that
there is no other money, property or other evidence of debt
in my possession that belongs to the Judgment Debtor.
5. I, or I on behalf of the Garnishee, have FORWARDED TO THE
ATTORNEY named on the reverse side the amount of money so
held by me to the extent of the amount due plus costs as
shown on the reverse.
THE AMOUNT FORWARDED IS $ NONE.
6. If I, or I on behalf of the Garnishee, hold property
(listed above) other than money which I am unable to forward,
I hereby disclose (in Paragraph 3 above) such property and
will hold and safely keep such property pending further Order
of the Court.
7. In addition, I have sent the original of this Answer and
the Order on the reverse to the Court, and copies to the
attorney named on the reverse and the Judgment Debtor.
by the inconsistencies between the Bank's answers to the
garnishment order and James's testimony, Cindy's
attorney, Aaron Hostettler, contacted the Bank's vice
president, Alan Houck, via email on May 22, 2012. Mr.
Hostettler explained why he believed James did have accounts
with the Bank and requested that the Bank investigate the
matter further, stating that either James had committed
perjury or the Bank had failed to reasonably inquire into
James's holdings at the Bank. Mr. Hostettler then sent two additional
emails to the Bank's representatives, in which he stated
that he needed an explanation as to what happened to the
accounts and would be setting times for depositions. Mr.
Houck responded to Mr. Hostettler's original email the
following day. In pertinent part, his email stated that:
[U]nfortunately, our answer still remains none to the bank
holding any garnishable funds or assets of the named
debtor. Is it possible that Mr. Deal was confused and/or gave
the wrong name of the bank holding his CD's? Or, could
the deposits have been held under another name or tax id #?
. . .
Is it possible to review the deposition questions and answers
and make sure the name of the bank holding the CD accounts is
truly First & Farmers National Bank?
more emails from Mr. Hostettler to representatives at the
Bank followed, to which he received no response. Mr.
Hostettler then contacted counsel for James seeking an
explanation as to what had happened to James's accounts.
No explanation was given. For reasons that are not entirely
clear from the record, Cindy did not seek any formal
discovery from the Bank, such as the deposition her former
co-counsel had suggested.
believing that James had perjured himself, Cindy moved the
court to hold James in contempt on June 18, 2012. In July of
2012, the Pulaski Circuit Court held contempt hearings, which
culminated in the court indicating that it would hold James
in contempt and require him to submit to another deposition.
At some point before the order was entered, James's
attorney provided Mr. Hostettler with copies of James's
bank statements. These statements indicated that James did,
in fact, have a deposit account with a positive account
balance at the Bank. The statements also indicated, however,
that all funds in James's account at the Bank were in the
form of veteran's or Social Security benefits, which
federal law exempts from garnishment.
discovering that James did have an account at the Bank, Mr.
Hostettler reinitiated email correspondence with Mr. Houck
and other Bank representatives seeking an explanation for
what he felt was an "egregious misrepresentation"
by the Bank. Mr. Houck responded that when the Bank received
the garnishment order the "compliance folks"
advised the Bank that the funds in James's account were
non-garnishible and that the Bank was required to respond to
the garnishment order in the way that it did for
"confidentiality reasons." Further, Mr. Houck
emphasized that in all of his emails to Mr. Hostettler he had
explicitly stated that James did not have
garnishable funds deposited with the Bank, not that
he had no funds with the Bank. Cindy then filed a motion to
hold the Bank in contempt, which was overruled. Even though
the trial court overruled Cindy's contempt motion, it
instructed that she could file a separate action against the
Bank, if she so desired.
January 23, 2013, Cindy filed the present action alleging
that the Bank's answer to the garnishment order contained
false statements of material fact and that subsequent
communications from the Bank either contained further false
statements of material fact or made material and substantial
omissions of material fact on which Cindy had relied to her
detriment. The complaint brought allegations under
KRS 425.526, which creates a cause of
action for a garnishee's failure to make a satisfactory
disclosure in response to a garnishment order. In the
alternative, Cindy asserted common law claims of fraudulent
misrepresentation and/or fraudulent omissions of material
fact. Cindy claimed that the Bank was liable to her for the
entire amount of the judgment she held against James,
attorney's fees, and punitive damages.
Bank moved for summary judgment on the basis that it could
not be liable to Cindy as a matter of law because newly
enacted federal regulations, which it had complied with,
preempted the state law claims that Cindy had brought against
it. Specifically, the Bank pointed to the fact that 31
C.F.R. § 212 mandates that if a
financial institution finds that exempt funds were deposited
into an account subject to an order of garnishment, the
financial institution must ensure that the account holder has
access to the exempt funds. As such, the Bank argued, it had
no way to answer the garnishment order in a way that would
comply with federal regulations. The circuit court concluded
that the Bank could have simultaneously complied with both
state and federal authorities by informing Cindy that James
had an account with funds in it at the Bank, but that those
funds could not be turned over because they were exempt from
garnishment under federal law. Even though the circuit court
determined that the Bank's answer was not technically in
compliance with the state garnishment statutes, it held that
Cindy could not prove that the Bank's actions damaged her
because none of the funds in the Bank's possession were
garnishable under federal law. This appeal by Cindy followed.
Standard of Review
judgment is appropriate if "the pleadings, depositions,
answers to interrogatories, stipulations, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of
law." CR 56.03. In hearing
a motion for summary judgment, the court examines evidentiary
matter not to decide any issues of fact, but to determine if
a real issue exists.
doubts must be resolved "in a light most favorable to
the party opposing the motion for summary judgment and all
doubts are to be resolved in [that party's] favor."
Steelvest, Inc. v. Scansteel Serv. Ctr., Inc., 807
S.W.2d 476, 480 (Ky. 1991). Thus, summary judgment is only
proper "where the movant shows that the adverse party
cannot prevail under any circumstances." Id. at
479. This standard has been interpreted in a practical sense,
not in an absolute sense. See Perkins v. Hausladen,
828 S.W.2d 652 (Ky. 1992). "Because summary judgments
involve no fact finding, this Court will review the circuit
court's decision de novo." 3D Enters.
Contracting Corp. v. Louisville & Jefferson Cty. Metro.
Sewer Dist., 174 S.W.3d 440, 445 (Ky. 2005).
delving into the specifics of Cindy's claims against the
Bank, we will briefly review the applicable state and federal